…because I’m an economist and a mom–that’s why!

Obama Administration Realizes They Will Have to Do “Other Things”

August 3rd, 2009 . by economistmom

On This Week with George Stephanopoulos, Treasury Secretary Tim Geithner uttered the big “T” word… well, sort of.  George tried to get Geithner to say, explicitly, that TAXES would have to go up, but all he got was “THINGS.”  From the transcript (which I have corrected (as noted) to match the video,  and emphasis added):

GEITHNER: George it is absolutely right and very important for everyone to understand we will not get this economy back on track, recovery will not be strong enough to sustain unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established. Remember we inherited a 1 point three trillion dollar deficit. The cumulative consequences of the policies this country pursued over the last 8 years left us with 6 million [trillion] dollars of more debt than we would have had by making a bunch of commitments to cut taxes and add to spending without paying for those. We are not going to be able to afford to do that. And it is very important that people understand that. Our first priority now though is to get this economy back on track, make sure this financial system is repaired. Without that, we’re not going to get our deficits under control and the necessary path to fiscal responsibility, the necessary path to getting this country living within our means again is not just health care reform, to bring down those costs, but we’re going to [do] a range of other things and that’s going to be a very difficult challenge for this country. We can do this, it just requires the will to act.

STEPHANOPOULOS: Including new revenues?

GEITHNER: Well, we’re going to have to look at  we’re going to have to do what’s necessary. Remember the critical thing is people understand that when we have recovery established, led by the private sector, then we have to bring these deficits down very dramatically. We have to bring them down to a level where the amount we’re borrowing from the world is stable at a reasonable level. And that’s going to require some very hard choices. And we’re going to have to do that in a way that does not add unfairly to the burdens that the average American already faces.

STEPHANOPOULOS: But that’s the dilemma, isn’t it?

GEITHNER: That is the dilemma.

STEPHANOPOULOS: Because when you look at health care reform again  I know you believe it’s going to bend the cost curve over time. But the Congressional Budget office says, at best, the health care reform plans out there are going to be deficit-neutral over the next ten years. So to bring the deficits down, there is not enough money in the discretionary budget, we all know that. That means more revenues. The President has said that taxes won’t go up for any Americans earning under $250,000, but it doesn’t appear that he’s going to be able to keep that promise if you’re going to bring the deficits down.

GEITHNER: George, we can’t make these judgments yet about what exactly it’s going to take and we’re going to get there. But the very important thing, and no one is going to care about this more than the President of the United States, is for people to understand that we do not have a choice as a country, that if we want an economy that is going to grow in the future, people have to understand that we have to bring those deficits down. And it’s gonna, it’s going to difficult - hard for us to do and the path to that is through health care reform. But that’s necessary but not sufficient. We [are] going to do some other things too…

Well, now I think I’ll start pushing the Administration to think more seriously about “Fundamental Things Reform” and maybe even the idea of a “Value Added Thing” (VAT) to fund health care reform (which incidentally is an idea former Fed chairman Alan Greenspan brought up in the same show).  Hey, this could work…  ;)

4 Responses to “Obama Administration Realizes They Will Have to Do “Other Things””

  1. comment number 1 by: Brooks

    How ’bout this as a question to someone in the Obama Administration who claims this healthcare reform will “bend the curve” of federal healthcare spending downward:

    “Are you saying that expansion of coverage will have the effect of lowering federal spending on healthcare, or even that expansion of coverage will somehow pay for itself, or are you really saying that we need the cost-control measures (medical IT, comparative effectiveness, perhaps a public option without subsidy) to bend the curve, and that expansion of coverage is something we should do on humanitarian grounds even though we’ll need to make major sacrifices to pay for it, on top of the major sacrifices we are already facing down the road?”

    It’s really annoying to see the media letting the Obama Administration get away with this packaging — lumping in expansion of coverage with the cost-control measures as if the whole package is needed to “bend the curve”, when one part plausibly would bend the curve somewhat downward, and the other part would surely bend it very substantially upward.

    Wish folks in Stephanopoulos’ position would call them on that “rock soup” , “bacon, sausages and orange juice” , sleight of hand rhetoric.

    And in case I’ve missed it, if a good case has been made that adding expansion of coverage to other “reform” elements would reduce long-term federal spending on healthcare (vs. those cost-control measures without expansion of coverage), someone please refer me to it.

  2. comment number 2 by: Jim Glass

    Treasury Secretary Tim Geithner uttered the big “T” word…

    In what was certainly a coordinated joint launching of a trial balloon, Summers was at the same time uttering the same thing on another network’s Sunday talk show.

    And when the balloon went down in flames under a hail of fire, boy the White House couldn’t disavow it quickly enough!

    White House steadfast on pledge of no middle-class tax increase

    The White House shot down concerns Monday that middle-class families may face a tax increase in order to combat rising deficits and a struggling economy.

    “The president was clear during the campaign about his commitment on not raising taxes on middle-class families,” White House press secretary Robert Gibbs said Monday afternoon…

    When pressed by reporters Monday on Geithner and Summers’ comments, Gibbs said “They allowed themselves to get into a little hypothetical back-and-forth.” …

    During the 2008 presidential campaign, Obama made it clear that the middle class — whom he defined as anyone making under $250,000 — would not face any tax increase.

    “If you make under $250,000, you will not see your taxes increased by a single dime. Not your income tax. Not your payroll tax. Not your capital gains tax. No tax,” he said.

    The president recently reiterated that he stands behind that promise… [CNN]

    “That balloon didn’t come from here! What a strange coincidence that those guys got themselves off hypothecating about the same won’t-ever-happen thing at the same time on different channels…”

    Obama’s going to have a very difficult time keeping that tax pledge and his spending promises and his promise not to increase the debt (any more). It looks like maybe they are beginning to feel that fact.

    Arithmetic seems to indicate that one of the three will have to give. It will be interesting to see which one it will be, and the consequences.

  3. comment number 3 by: Brooks

    As follow-up to my earlier comment, I just checked tomorrow’s (technically today’s) WaPo and, well, there they go again. In an op-ed, HHS Secretary Sebelius spews the same spin, saying:

    Without reform, we will miss out on these benefits. And our health-care system will still be a fiscal time bomb. Recent estimates indicate that by 2040, health-care costs will eat up 34 percent of our gross domestic product. By comparison, the entire federal budget today is just 20 percent of our GDP. By acting now, we have the chance to slow health-care costs in a way that doesn’t slash benefits or reduce care. Instead, we can make investments in prevention, wellness and health information technology that will allow the health-care system to deliver incredible results at prices we can all afford.

    Oh goodie! Win-win! All gain, no pain!… Um, wait, how exactly is providing coverage for 40 million Americans part of this reduction in federal spending? Why is the need to reduce projected federal spending on healthcare the rationale (or part of the rationale) for providing that coverage for all those people? If the answer is that, actually, the expansion of coverage would make spending higher rather than lower, wouldn’t it be more honest to say we need those cost-containment measures to reduce federal spending on healthcare, and to present some other argument for expanding coverage despite the effect of increasing spending and worsening the fiscal outlook that you rightly emphasize as a huge and increasingly urgent problem*?

    As a note, even the claims about savings from preventive care are somewhere between greatly exaggerated and completely mistaken. See this analysis . And, however cold this sounds, as far as the question of overall impact on our long-term fiscal imbalance of even lifestyle changes such as smoking cessation and obesity, The Congressional Research Service has concluded that “Governments save on the costs of old-age medical care, social security, and nursing home care due to the earlier death of smokers…Smoking has apparently brought financial gain to both the federal and state governments, especially when tobacco taxes are taken into account. In general,smokers do not appear to currently impose net financial costs on the rest of society.” See also And similar conclusions have been reached regarding obesity.

    * By the way, (1) even if “deficit-neutral” over 10 years, it will make the long-term fiscal outlook worse if, as will most likely be the case, the offsets have a lower growth rate than that of the incremental spending, and (2) even if deficit-neutral over the long term, it would still make solving the fiscal imbalance problem more difficult and painful because spending reductions and tax increases used to offset this incremental spending will no longer be available for deficit-reduction, leaving us to make more painful sacrifices.

  4. comment number 4 by: Brooks

    Apropos of my comments above regarding preventive care, here’s an article in today’s news headlined: “Prevention may save lives, but not money”